Which of the Following Statements Is True

question 71

Multiple Choice

Which of the following statements is true?

• A)If W < VMPL, the firm should hire more labor.
• B)If W > VMPL, the firm should hire more labor.
• C)If W = VMPL, the firm should hire more labor.
• D)If W > 0, the firm should shut down.

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Definitions:

AVC

Average Variable Cost, which is the variable cost per unit of output, calculated by dividing total variable costs by the quantity of output.

ATC

Average Total Costs, which is the sum of all production costs (fixed and variable) divided by the quantity of output produced, detailing the average cost per unit of output.

Economic Conditions

The state of an economy at a given time, encompassing factors such as inflation, unemployment rates, and GDP growth.

Decreasing-Cost Industry

An industry where average costs of production decrease as the industry grows and output increases, due to factors like technology improvements or economies of scale.